1
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
FMI May 6-8, 2007
2
Source: The World According to Shoppers, 2004
A Number Of Forces, Trends, and Pressures Are Affecting Shopper Behavior
As consumers grow more time-starved, we are seeing changes in their preferences and behaviors
Almost two thirds of consumers do not feel there is enough time in the day to meet all their commitments, with 36% feeling strongly that this is true.*
Americans are spending more than three times as much time sitting in traffic than they did 20 years ago. The average delay per person per year is 36 hours now vs. 11 hours in 1982.**
*Source: Mintel/TechnoMetrica**Source: Texas Transportation Institute, Urban Mobility Study 2001
Shopper Insights
3
4.4
4.4
4.1
4.1
3.8
3.1
2.9
4.3
4.3
4.2
4.2
1 2 3 4 5Not Important Important
Good customer service
Products always in stock
Fast checkout
Easy to shop
Broad product assortment
Convenient location
Special deals or promotions
Best selection of products for me
Quality name brand products
Store brand/private label items
First to offer new products
Source: Meyers Research and MVI, August 2004
Important considerations for shoppers when deciding where Important considerations for shoppers when deciding where to shopto shop
How are these lifestyle changes affecting the shopper’s behavior?
““Shop-Ability” Impacts Where Consumers Decide to Shop-Ability” Impacts Where Consumers Decide to ShopShop
““Shop-Ability” Impacts Where Consumers Decide to Shop-Ability” Impacts Where Consumers Decide to ShopShop
Shopper Insights
4
60% of supermarket purchase decisions are completely unplanned (i.e. category not in consideration set in advance of trip)
Higher Shop-abilityGreater Potential to Drive
Unplanned Purchases=
Shopable stores are better positioned to capture unplanned purchases
Source:POPAI Consumer Buying Habits Study, MVI
Shop-ability = “Anything that enables the shopper to make a faster, easier, better decision”
Shopper Insights
5
Evolving shopperneed states…
Trends driving shoppingpatterns among consumers…
Care for Family
Smart budget shopping
Efficient stock-up
Discovery
Bargain Hunting
Specific Item
Reluctance
Grab & Go
Immediate Consumption
Care for Family
Care for Family
MoneyMoney
TimeTime
PersonalPersonal
Consumer Pressures are Forcing Shopper Needs to Evolve
• Savings (good price) Important• Store Hopping is Common• Many are Paycheck-driven
• One-stop Shopping• Less Tolerant of Delays• Fast Checkout is a Must
• Personal Indulgences• “Take Care of Me”• Like/Dislike Shopping
• More Focus on Family• Trust Matters• Shopping Provides a Connection Point
Fill-InFill-In
Quick MissionQuick Mission
Traditional Shopping Need States
27%
16%
18%
9%
10%
9%
4%
5%
2%
% of Grocery Spend
Source: “The World According to Shoppers”
Advanced Shopper Insights
Stock-upStock-up
Shopper Insights
6
Need States – Large Dollar Rings
$110Average
spending per shopping trip
19%Percentage of
grocery shopping trips
Care for Family
Driven to do the best they can for
their families
“I buy what people ask for and what I think will please them, but I always make a decision that ensures it’s
good for them.”
Efficient Stock-Up
Laying in supplies to minimize the number of times they have to go to
the store
“I don’t like to grocery shop, so on my major
trips, I buy everything I can
$95
13%
Smart Budget- Shopping
Want to do the right thing for the family, but saving
money is important in their decisions
“I’m laying in supplies for the long term. I want the store to make it easy for
me to find savings.”
$93
15%
Discovery
Explorers hoping to find something new
$90
7%
“I like to browse during my grocery shopping
trips. Every trip is a little different. I look for new ideas, new recipes, new foods—& non-grocery products like clothes.”
Source: “The World According to Shoppers”
Shopper Insights
7
Need States – Medium Dollar Rings
$57
13%
$60
11%
$58
8%
Bargain-HuntingAmong Stores
Specific Item
Reluctance
“I just don’t want to be here. I’d rather have somebody else do
my shopping or go online.”
Focus first and foremost on one or two urgently needed
items
“I need something right away; a specific food, ingredient, prescription medicine, or
alcoholic beverage. If it’s not on the shelf, I’m likely to go to the
next store.”
Don’t want to grocery shop and seek as little involvement
as possible
Look for tactical bargains on specific items as
opposed to overall savings
“I take pride in what I do. I like to tell my friends about the
deals I find.”
Advanced Shopper Insights
Source: “The World According to Shoppers”
Average spending per shopping trip
Percentage of grocery
shopping trips
Shopper Insights
8
Small-BasketGrab & Go
Want to get in, grab a short list of items, and get out in a hurry
Need States – Small Dollar Rings
“Bread, milk, bananas, and beer. In and out in 10-minutes. That’s what I’m here
for.”
$41Average spending per shopping trip
9%Percentage of
grocery shopping trips
ImmediateConsumption
“I’m thirsty, I’m hungry, or I need cigarettes.”
Seek to satisfy a craving
$32
5%
Source: “The World According to Shoppers”
Shopper Insights
9
Top 5 Categories Purchased
Dairy (72%)
Produce (70%)
Packaged food (66%)
Frozen food (64%)
Fresh meat (60%)
Snacks/candy/gum (39%)
Non-alcoholic beverage (26%)
Dairy (26%)
Produce (22%)
Frozen Food (21%)
High IndexingProducts
Imported cheese (157)
Fresh fish (163)
Refrigerated prepared food (158)
Fresh baked goods (152)
Non-alcoholic beverage (152)
Fresh prepared food (162)
Cigarettes (143)
Magazines (113)
Two Need States Indexing Highfor Non-Alcoholic Beverages
(%) = Frequency of purchase
(#) = Frequency of purchases in need state/avg. frequency of purchases across all need states.Source: “The World According to Shoppers”
$32Average spending per shopping trip
5%Percentage of grocery shopping trips
$110
19%
Care for Family Immediate Consumption
Shopper Insights
10
8 Beverage Categories
40 Retail Customers
8 Beverage Categories
40 Retail Customers
7 Channels
50 DMAs across the U.S.
7 Channels
50 DMAs across the U.S.
MethodologyMethodology
SizeSizeOne of the largest One of the largest surveys we have ever surveys we have ever conductedconducted
BreadthBreadthUnprecedented cross Unprecedented cross channel viewchannel view
DepthDepthDeep view of customers Deep view of customers never done beforenever done before
60,000 online respondents, 1,200 in-
store interviews
115,000+ shopping occasions
60,000 online respondents, 1,200 in-
store interviews
115,000+ shopping occasions
Shopper Insights
11
Connecting with the Shoppers’ Needs and Motivation helps Builds Loyalty and Sales
It all begins with the NEEDS of the SHOPPER
CONSUMPTION
Grocery, Clubs, Supercenters,
Drug, CR, Mass; Value
PURCHASE CHOICE
SHOPPING EXPERIENCE
OCCASION BASED
CHANNEL CHOICE
SHOPPING NEED
Shopper Insights
12
Cleanliness and neatness of the store
Cleanliness, Selection and Convenience are Very Important in Store Choice
Source: Landmark Study, October 2005
Is close to where I live or work
Freshness of produceand meats
Does not runout of stock of products I want
38%38%
40%40%
22%22%
20%20%
Source: Landmark Shopper
Shopper Insights
13
Health & Wellness Focus is critical Across a Variety of Areas
Green denotes overindex of 120+, red denotes underindex of at least 80
40%44%37%42%40%44%41%40%I would like my favorite brands to provide more nutritional information on their products
40%43%39%43%36%41%42%41%Organic foods are healthier than other foods
43%47%42%45%39%44%44%43%All natural foods are healthier than other foods
47%47%40%58%46%47%53%50%I am very knowledgeable about nutrition
49%52%40%50%45%50%57%53%I buy more fresh foods than packaged foods when I go grocery shopping
38%42%37%41%36%41%38%35%Nutrient-enhanced foods are healthier than other foods
40%39%39%38%40%40%44%39%I and/or another member of my household is on a diet
Health & Wellness
55%57%51%59%58%53%54%56%I and/or another member of my household is taking a prescription medication for a health condition
59%59%57%56%63%76%60%61%I weigh more than I should
24%
34%
Grocery
26%
39%
Club
28%
35%
Total
31%
31%
Conv. Retail*
31%
39%
Drug
24%
32%
SC
32%30%I’m lucky, I don’t have to worry much about what I eat and drink
37%37%Keeping fit is more important to me than to most people
DollarMass
40%44%37%42%40%44%41%40%I would like my favorite brands to provide more nutritional information on their products
40%43%39%43%36%41%42%41%Organic foods are healthier than other foods
43%47%42%45%39%44%44%43%All natural foods are healthier than other foods
47%47%40%58%46%47%53%50%I am very knowledgeable about nutrition
49%52%40%50%45%50%57%53%I buy more fresh foods than packaged foods when I go grocery shopping
38%42%37%41%36%41%38%35%Nutrient-enhanced foods are healthier than other foods
40%39%39%38%40%40%44%39%I and/or another member of my household is on a diet
Health & Wellness
55%57%51%59%58%53%54%56%I and/or another member of my household is taking a prescription medication for a health condition
59%59%57%56%63%76%60%61%I weigh more than I should
24%
34%
Grocery
26%
39%
Club
28%
35%
Total
31%
31%
Conv. Retail*
31%
39%
Drug
24%
32%
SC
32%30%I’m lucky, I don’t have to worry much about what I eat and drink
37%37%Keeping fit is more important to me than to most people
DollarMass
* Excludes trips where only gas was purchasedQ55. For each statement please indicate how much you agree or disagree that the statement describes you and your household.Source: Landmark Shopper Study, October 2005
= over index 120+ = under index of at least 80
25% of Shoppers are Extremely Mindful of Health & Wellness when making choices of foods, beverages, and level of physical activity
Shopper Insights
14
Shoppers are Pressed for Time across all shopping segments
Supermarkets have the opportunity to satisfy time starved grocery shoppers by ensuring high household penetration and high purchase frequency products are in
stock on shelf and display and these categories are easy to shop.
Q55. For each statement please indicate how much you agree or disagree that the statement describes you and your household.Source: Landmark Shopper Study, October 2005
= over index 120+ = under index of at least 80
28%31%34%30%24%31%21%23%I don’t have time to make major, stock-up types of shopping trips
36%35%42%38%34%37%33%32%I spend more time away from home than at home
45%46%51%43%42%45%35%43%I usually choose whichever store will be the fastest and easiest for me to get in and out of
Convenience / Time Pressures
27%27%33%26%26%31%25%22%We are so busy that we’re rarely all at home at the same time
55%55%55%54%56%67%55%52%I feel like I never have enough time to get everything done
Grocery Club TotalConv. Retail*DrugSuper-
center DollarMass
28%31%34%30%24%31%21%23%I don’t have time to make major, stock-up types of shopping trips
36%35%42%38%34%37%33%32%I spend more time away from home than at home
45%46%51%43%42%45%35%43%I usually choose whichever store will be the fastest and easiest for me to get in and out of
Convenience / Time Pressures
27%27%33%26%26%31%25%22%We are so busy that we’re rarely all at home at the same time
55%55%55%54%56%67%55%52%I feel like I never have enough time to get everything done
Grocery Club TotalConv. Retail*DrugSuper-
center DollarMass
Shopper Insights
15
The Grocery Channel Satisfies a Variety of Functional Needs for Shoppers
Q27. What needs were you trying to satisfy when you went to [store] on this occasion? Source: Landmark Shopper Study, October 2005
Green denotes overindex of 120+, red denotes underindex of at least 80
18%9%51%17%7%7%5%11%To satisfy an immediate hunger, thirst or craving
11%12%1%5%17%10%25%16%To stock up on a wide variety of grocery and household items for future use
17%17%15%20%14%20%19%16%To obtain specific products or brands that I prefer
16%16%8%13%21%21%19%17%To obtain items that other household members wanted or requested
16%18%5%29%10%18%10%22%To pick up specific sale/bargain items that I was aware of
12%6%3%2%16%6%11%25%To obtain items that I needed to prepare and serve a specific meal
32%35%37%40%29%35%22%27%To take care of an immediate need for a specific item or items
16%9%3%3%28%9%25%30%To buy enough food to have on hand at home
30%40%11%26%38%36%34%36%To buy a few items that I or my household had run out of
39%42%22%33%49%36%50%49%To replenish items that I was low on or out of
Group TotalDollar
Conv. Retail*Drug
Super-centerMassClubGroceryFunctional Needs
18%9%51%17%7%7%5%11%To satisfy an immediate hunger, thirst or craving
11%12%1%5%17%10%25%16%To stock up on a wide variety of grocery and household items for future use
17%17%15%20%14%20%19%16%To obtain specific products or brands that I prefer
16%16%8%13%21%21%19%17%To obtain items that other household members wanted or requested
16%18%5%29%10%18%10%22%To pick up specific sale/bargain items that I was aware of
12%6%3%2%16%6%11%25%To obtain items that I needed to prepare and serve a specific meal
32%35%37%40%29%35%22%27%To take care of an immediate need for a specific item or items
16%9%3%3%28%9%25%30%To buy enough food to have on hand at home
30%40%11%26%38%36%34%36%To buy a few items that I or my household had run out of
39%42%22%33%49%36%50%49%To replenish items that I was low on or out of
Group TotalDollar
Conv. Retail*Drug
Super-centerMassClubGroceryFunctional Needs
* Excludes trips where only gas was purchased = over index 120+ = under index of at least 80
Shopper Insights
16
Beverages are Staples on the Heavy Basket Shopper Trips
Q33a: Which of the following types of non-alcoholic beverages did you buy on this shopping trip Source: Landmark Shopper Study, October 2005
• Light Grocery Trip = $1 to $40 (roughly 50% of Grocery trips) • Medium Grocery Trip = $41 to $84 (roughly 30% of Grocery trips) • Heavy Grocery Trip = $85 and higher (roughly 20% of Grocery trips)
Incidence Index for Beverage Purchases on Light, Medium and Heavy Shopping Trips
Light Grocery
Trips
Medium Grocery
Trips
Heavy Grocery
Trips
Carbonated Soft Drinks or Sodas 67 116 156
Juices, Juice drinks, Fruit Smoothie 61 113 178
Bottled Water or Flavored Water 56 125 194
Sports Drinks or Fitness Water 50 100 183
Yogurt Drink 50 125 225
RTD Tea (not hot) 50 100 175
Flavored or Fortified Milk or Milk Drink 69 108 154
Energy Drinks 50 150 250
RTD Coffee (not hot) 50 150 250
Meal Replacement Beverages 100 200 300
Any Beverage 79 113 131
No Beverages 142 73 36
Shopper Insights
= over index 120+ = under index of at least 80
17
• Convenience Retail Shopper Behavior Study
• Display Effectiveness Studies
• Display Mix Study – Supermarkets
• CSD Ad Feature Optimization Analysis
• Out-of-Stock Study Supermarkets
• Beverage Consumption Purchase Cycle Learnings
• Home Meal Replacement Study
• Cross Category Shelf Space Comparison
• Role of the CSD Category in Supermarkets
• Beverage Market Structure Study
• Coca-Cola Retailing Research Council Studies
Coca-Cola leads in Insights and Research used to Understand the Shopper, Industry and Category
• ACN Channel Blurring
• Grocery SuperStudy
• Convenience SuperStudy
• Center-Store Re-invention
• Store Optimization Research
• Landmark Study
• RFID Shopper Insights
• Shared Ad Analysis
Shopper Insights
18
Insights to ActionShopper Insights
ActionsActionsInsightsInsights
Retailer focus on “shop-ability” Retailer focus on “shop-ability” will help attract and maintain loyal will help attract and maintain loyal shoppers.shoppers.
As consumers grow more time-As consumers grow more time-starved, we are seeing changes in starved, we are seeing changes in their preferences and behaviors.their preferences and behaviors.
Utilize in-store messaging to Utilize in-store messaging to help consumers effectively help consumers effectively navigate categories and store.navigate categories and store.
Cleanliness, Selection andCleanliness, Selection and Convenience are very Convenience are very important in Store Choice.important in Store Choice.
Shoppers feel strongly that there Shoppers feel strongly that there is not enough time in the day to is not enough time in the day to meet all their commitments.meet all their commitments.
Emphasize perimeter selections Emphasize perimeter selections and fast checkouts.and fast checkouts.
Shopper Insights
19
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
20
Clear SegmentsClear Segments
CSD MILK
BEER
JUICE
POWDERED DRINKS
INSTANT COFFEE
TEATreat, Fun
Nutrition Relax
Perk Up
Social Reward
Cheap for Kids
Breakfast
19841984
Now - Many New Now - Many New “Categories” and “Categories” and
Further Further SegmentingSegmenting
BEER
Spirits
Diet
MILKReg.
JUICEJuice
Drinks
Bottled
Water
Flavored Milk
Energy Drinks
Sports
Drinks
Mixers
Tap Water
Purified Water
INSTANT COFFEE
Herbal
Teas
Café
Coffee
Flavored
Coffees
20072007
Flavored
Sparkling Water
Diet Flavored
Mineral Water
Yogurt
Drinks
Premium
Wine
TEAFruit Teas
Fresh
Coffee
CSD Regular
ImportedLightImportedLight
Soy D
rinks
Powdered Drinks
2% Skim
Consumers Have More Beverage Choices Than Ever Before
CategoryInsights
21
Share Of Stomach – Total U.S.
Reflects consumption rates and importance of categories
Source: Beverage Digest Fact Book 2007, BD/Maxwell
CSD 27.9 (-.4)
Tea 3.9 (+.1)Juices 4.4 (-.3)
Bottled Water 11.5 (+.8)
Coffee 8.9 (-.1)
Milk 10.7 (-.3)
Beer 11.9 (+.2)
Sports Drinks / Energy 2.6 (+.3)Wine 1.3 (+.1)
Tap Water 14.8 (-.5)
Share (Share chg. vs. Prior)
CategoryInsights
155 Total Annual Gallons per Person = 54oz. Per Day
22
CategoryInsights
CSD 56.5 (-0.7%)
The Size and Value of the Nonalcoholic Beverage Category in all measured channels
is growing >$2.3B +6.0%Category Value (Dollar) Share / Dollar % Change
Source: Nielsen All Measured Channels Total US 12 months ending 3/31/2007
Sports Drinks 10.0 (+6.8%)
Single Serve Water 14.7 (+14.1%)
Energy Drinks 8.5 (+30.3%)
RTD Tea Bottle/Can 4.3 (+19.6%)RTD Coffee 1.5 (+14.4%)
Juice & Drinks 4.4 (-1.4%)
Total Nonalcoholic Beverages = $39B, of which $22B is CSD
23
The Beverage Category is very Important: More Consumers say they drink CSDs Daily or
Weekly than any other non-tap Water Beverage
1.4%
1.5%
3.8%
4.3%
11.7%
21.7%
18.5%
23.7%
45.3%
38.7%
10.7%
14.9%
8.9%
23.2%
19.2%
8.5%
20.5%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Packaged RTD Coffee
Energy Drinks
Packaged RTD Cold Tea
Sports Drinks
Freshly Prepared Cold Tea
Packaged Water Multi-Serve
Any 100% Fruit Juice
Packaged Water Single-Serve
Tap Water
CSD
Daily
Weekly
Monthly
Less Than Monthly
Source: USA BevCAT 2005 Survey
Beverage Category Consumption Frequency
CategoryInsights
24
Carbonated Soft Drinks Total U.S.Corporate Share and Brand RankingsRetail / Fountain / Vending Channels
Source: Beverage Digest Fact Book 2007Includes Retail, Fountain and Vending Channels
CategoryInsights
Coca-Cola
Pepsi-Cola
Dr Pepper / CadburyCott
National Beverage
All Other
Rank Brand 2006
Share
1 Coca-Cola Classic 17.3
2 Pepsi-Cola 11.0
3 diet Coke 9.8
4 Mt. Dew 6.6
5 Diet Pepsi 6.0
6 Dr Pepper 5.8
7 Sprite 5.7
8 Fanta 1.8
9 Diet Mt. Dew 1.5
10 Diet Dr.Pepper 1.5
Corporate Share
25
The Soft Drink Category is very important to Shoppers: In addition to high buying rate, Soft Drinks Purchase Frequency ranks second only
to Bread
• Annually, shoppers spend 51% more dollars on Soft Drinks than on any other top 10 center store category - 28% of the Shopper trips include Soft Drinks.
• Bread is the only center store category that surpasses Soft Drinks purchase frequency.
$41.38
$29.35 $28.97
$46.71
$72.17
$26.85$29.54
$22.11$26.18
$58.01
21
79
85 71418
810
7
Soft Drinks Bread &Baked Goods
Cookies CrackersRTE CerealSnacks CandyShelf StableJuice
SoupBottled Water Coffee
Buying Rate ($) Purchase Frequency
$109.65
Buying Rate = Annual Category $ per Household.Purchase Frequency = Average number of shopping trips (purchase occasions) on which the Category was purchased.Penetration = % of Households Buying the Category at least once per year in any outlet.Incidence = % of ALL trips made by all shoppers that include a purchase of the item/category
Source: Nielsen Homescan TOTAL U.S. - TOTAL GROCERY $2MM- 52 WEEKS ENDING 12/31/06
Incidence:
HH Penetration:
CategoryInsights
26
Nonalcoholic Beverage Categories can be grouped into four Consumer Need
States
Performance Beverages
FunctionalFunctional
CSDs and Refreshing Alternatives
Convenient RefreshmentConvenient Refreshment
“Enjoyable Refreshment” CSDs
“Healthy Refreshment”Fruit Drinks (<10% Juice)
“Versatile Refreshment”RTD Teas
“Refreshing Alternatives”
Shelf Stable Juices & Drinks (> 10% Juice)
Sports Drinks
Sports Hydration
Energy Drinks
Water
HydrationHydrationOn-the-Go
Single-Serve Water:
At HomeGallons
Enhanced SparklingPurified Spring Imported
Juice/Drink Shelf Stable
Health & WellnessHealth & Wellness
Youth
Family
Adult
Shelf Stable Juices & Drinks (>10% Juice)
CategoryInsights
27
Clear Organization and Messaging helps Drive Shopper Conversion within the Need States
CSDsCSDs
WaterWater PerformancPerformance e
BeveragesBeverages
Convenient RefreshmentConvenient Refreshment
HydrationHydration FunctionalFunctional
“Navigating the store and simply finding the desired product easily becomes a more important consideration” - MVI
Sports Drinks, Sports Hydration, and Energy Drinks
Purified, Spring, Imported, and
Enhanced Sparkling
Juice / Juice Drink
Health & Wellness
Shelf Stable Juices & Drinks (>10% Juice)
CategoryInsights
28
Enjoyment Today Feel Good Today Feel Good Tomorrow
Hunger&
Digestion
Sensory Pleasure &
FoodEnhancement
Having a Good Time
Confidence &
Individuality
Energy / Stimulation Active
ReplenishmentMental
Renewal
Health, Beauty & Nutrition
Comfort & Relaxation
Routine Refreshment
Po
we
rO
pp
ortu
nity
Wh
ite S
pa
ce
Top Coca-Cola Brands in each need state
Coca-Cola’s Innovation Strategy Is Focused On Meeting Consumption Need States Of Your
Consumers
CategoryInsights
29
Insights to ActionCategory Insights
ActionsActionsInsightsInsights
Armed with Advanced Shopper Armed with Advanced Shopper Insights, Retailers can evolve with Insights, Retailers can evolve with Consumers.Consumers.
Consumer need states and Consumer need states and occasions drive beverage tastes, occasions drive beverage tastes, preferences and consumption.preferences and consumption.
Non-Alcoholic Beverages can be Non-Alcoholic Beverages can be organized intoorganized intoConsumer Need States.Consumer Need States.
Each beverage need state is Each beverage need state is unique, serving different unique, serving different consumer needs.consumer needs.
Clear messaging provides Clear messaging provides navigation, information and navigation, information and drives Shopper Conversion.drives Shopper Conversion.
Consumer needs are evolving Consumer needs are evolving with more beverage choices with more beverage choices than ever before.than ever before.
CategoryInsights
30
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
31
As Many Retailers Focus On Perimeter Categories In Their Efforts To Differentiate, Total Labor Costs Will Increase Even More
• “The total dollar value of labor costs for the perimeter can nearly triple those of center store items, driving down margins.”*
True Profit Margin
Weekly True Profit
Perimeter 4.0% $6,794.58Bakery -38.2% ($4,747.61)Deli & Foodservice 13.0% $3,883.00Floral -17.4% ($804.26)Meat 4.1% $1,894.24Produce 5.4% $2,839.11
True Profit Margin
Weekly True Profit
Center Store 8.1% $31,697.39Grocery 9.3% $15,850.66
CSD 8.8% $1,391.17
*Source: 2005 GMA Center of Store Study; True Profit from WBC SuperStudyTrue Profit = Adjusted Gross Profit - Activity Based Costing
FinancialAnalysis
32
$3.2
$3.7
$3.9
$4.4
$6.0
$6.3
$7.1
$7.2
$8.3
$10.2
$11.6
$11.7
COOKIES
TOTAL BOTTLED WATER
TOTAL ICE CREAM
TOTAL WINE
TOTAL JUICES DRINKS-SHELF STBL
TOTAL CEREAL
TOTAL BEER
TOTAL PREPARED FOODS-FROZEN
TOTAL CHEESE
TOTAL MILK
TOTAL BREAD & BAKED GOODS
TOTAL CARBONATED BEVERAGES
The Coca-Cola System Recognizes that Getting Center Store & Non-Alcoholic
Beverages Right is Essential
Source: Willard Bishop Consulting 2005 Supermarket Retailer Survey & WBC SuperStudy
Adj. Gross Profit $ per Store per Week
$63,983
Cen
ter
Sto
re
Per
imet
er
65% 35%
$118,299
Retail Executives say: “There are too many sales at
take; perishables can’t grow fast enough to overcome center-store
losses”
Retail Executives say: “There are too many sales at
take; perishables can’t grow fast enough to overcome center-store
losses”
Total Retail Dollars (Billions) Top Center Store Dollar Categories
Source: Nielsen Strategic Planner; Supermarkets $2mm+, 52 WE 9/9/06
3 of top 10 center store categories are Non-Alcoholic Beverages
FinancialAnalysis
33
Soft Drinks are an Important Component to “Center Store” Profitability
$3,449$3,539
$2,560
$1,896
$2,314
$1,839 $1,754
$1,472 $1,469
$1,081
Based on Weekly Sales, Soft Drinks rank second in Adjusted Gross Profit.
Source: Bishop Consulting (3) Chain Average Super Study – (Adjusted Gross Profit = GP – Trade & Terms)
Soft Drinks
Bread Cookies&
Crackers
RTECereal
Salty Snacks
Candy ShelfStableJuice
Soup BottledWater
Coffee
To
p T
en
Ce
nte
r S
tore
Ca
teg
ori
es
Center Store Adjusted Gross Profit
Adjusted Gross Profit= Gross Profit + Terms + Trade Dollars
FinancialAnalysis
34
Soft Drinks are One of the Most Productive Categories in “Center Store”
Source:2005 WBC Super Study: *AGMROII:Adjusted Gross Profit (Gross Profit+Terms+Trade dollars) / Avg Inventory $ on Hand
(Adjusted Gross Margin Return on Inventory Investment)
$11.92
$12.59
$17.41
$20.82
$25.81
$27.66
$34.30
$62.48
$63.67
$72.85
Coffee
Candy
Cookies & crackers
Soup
Ready-To-Eat Cereals
Shelf stable juice
Salty snacks
Soft Drinks
Bottled water
Bread
AGMROII Top Ten $ Categories
FinancialAnalysis
35
Insights to ActionFinancial Analysis
ActionsActionsInsightsInsights
Add value to make center store easier Add value to make center store easier to shop with relevant product to shop with relevant product information and convenience features. information and convenience features.
Evaluate store real estate dedicated Evaluate store real estate dedicated to products with high Gross Margin to products with high Gross Margin Return on Investment.Return on Investment.
Leverage the strength of Soft Leverage the strength of Soft Drinks to drive traffic to Center Drinks to drive traffic to Center Store.Store.
“Center Store” contributes significantly to results and is critical to Supermarket Profit.
Source:2005 WBC Super Study:
Soft Drinks are an Important Component to “Center Store” Profitability.
“Center Store” departments deliver 65% of Adj. Gross Profit.
FinancialAnalysis
36
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
37
Disproportionately important to shoppers to have Soft Drinks in ad
Soft Drink Pricing and Ad Presence Play a Significant Role in the Category’s Ability to
Drive Traffic
Soft Drink brand strength is a much stronger draw for shoppers than for other categories.
Q.1c: Still thinking about your next trip to purchase grocery items, which of the following are reasons you will go to the store for each of the items listed? Source: 2005 Shopper Pricing Perception Study
Top Reasons Why Shoppers Say Specific Categories Draw Them To their Supermarket
% of Shoppers
Need to replenishhome stock
To get the best price
A family memberasked for a specific item
Saw item on salein a newspaper/flyer
Soft Drinks
Dairy (Milk, Eggs, Cheese)
Fresh Meat/Fish
Produce (Fresh Fruit and vegetables)
94
39
32
23
96
27
3
14
88
40
2
14
83
18
17
2
Pricing & PromotionAnalysis
38
12pk Cans
Promotional Planning ModelerRetail Price Package Planning Tool linked to Sales
Forecasting System for developing a Retailer Promotional Plan by Package versus Prior
Data Source: KAEP – Key Account Event Planning
Pricing & PromotionAnalysis
39
Nielsen Based Elasticity ModelRetail Price Package Planning Tool for Evaluating and
Analyzing Elasticity over time
Data Source: Nielsen
Pricing & PromotionAnalysis
40
Nielsen Volume Throw ModelRetail Price Package Planning Tool for Analyzing
Volume lifts by price point across time
Data Source: Nielsen
Pricing & PromotionAnalysis
41
It is not about dividing the pie between . . .
It is about growing the total pie
Expanding Category Sales and Profits are mutually beneficial
Zero Sum Game
Win – Win Game
Manufacturer
RetailerRetailer
Manufacturer
Pricing & PromotionAnalysis
42
Traffic Driving Packages
Traffic Driving Packages
Profit Packages
Profit Packages
Creating Value for the RetailerCreating Value for the Retailer
Together We Can Improve Category Profitability, even in a rising cost
environment
Our Packages Play Various Category Roles in Balancing Traffic Building and Profit Generation
Pricing & PromotionAnalysis
43
Insights to ActionPricing & Promotion Analysis
ActionsActionsInsightsInsights
Utilize Soft Drinks to maintain Utilize Soft Drinks to maintain and grow trips, as well as and grow trips, as well as increase basket size. increase basket size.
Soft Drink pricing is an important factor in driving shoppers to the store.
Set pricing and profitability goals Set pricing and profitability goals and measure performance against and measure performance against them.them.
76% of shoppers believe mid priced Soft Drinks are reflective of total store pricing.
Total Basket Price Image is Closely Aligned with Soft Drink Price Image.
Use tools like RPA to jointly Use tools like RPA to jointly develop Profitable Retail Price develop Profitable Retail Price Package Plans.Package Plans.
Pricing & PromotionAnalysis
44
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
45
The Shopper Segmented Merchandising Opportunity
Shopper Segmented Merchandising:Delivering beverage solutions matched to each store’s DNA
Store A’s “Shopper DNA”
Each store serves a different mix of Shoppers, Occasions & NeedsEach store has a unique DNA
MarketEvaluation
46U.S. Census and BLS, 2003; Yankelovich Monitor, 2005; *GMA Study – Reducing Out of Stocks in the Grocery Channel, 2002
The Shopper Landscape Is Changing
• The shopper base is fragmenting
. . . of U.S. households may now be counted as “Traditional” families – a married couple with at least one child – vs. 44.3% in 1960
. . . of women are now in the workforce
. . .first year that Hispanics will control more disposable income than any other U.S. minority group.
MarketEvaluation
• Given the competitive environment & total shopping trips are down, each retailer has fewer opportunities to reach the shopper, so merchandising needs to match your shoppers when they are in your store
• Fewer Out-Of-Stocks is one of the top 3 items identified by shoppers to improve the shopping experience*
47
What Is Shopper Segmentation?
• Instead of creating one solution for millions of shoppers, develop smaller shopper segments and tailor solutions to these segments–For Beverages, segmentation drives assortment on Shelf, Displays and
Coolers: Right Brand, Right Package, Right Price, Right Occasion in the Right Store
Your Shopper Base Clusters
Impact At Store Level
MarketEvaluation
48
5011Store 4
71277Store 5
72134Store. . .
93142Store 6
15
2
1
Segm
ent …
0
6
5
Segm
ent 3
3
6
5
Segm
ent 2
3Store 3
12Store 2
10Store 1
Segm
ent 1
110K+ Households
. .clustered into
59BeveragePurchase Segments
90,000 stores are scored on 59 Beverage
Segments
Stores with similar scores are grouped together to form
5 Store Clusters
Water
Sports Drinks
Segments are based on beverage Purchase Drivers
and demographicsScoring is based on demographic fit
between store shoppers and beverage Purchase Drivers
Dynamic Clustering:
Grouping together stores with similar
beverage opportunities
Nielsen panel households
Beverage
Segments
SS Juice Energy Tea
Beverage Segments
90,000 stores in Spectra database: Grocery, Mass, Club, Drug, and Dollar formats
SSD
90
,00
0 s
tore
pro
file
s
Utilizing Nielsen’s new Dynamic Clustering Model, Shopper PurchaseSegments are mapped to Store Clusters to drive store-level changes
Shopper Segmented Merchandising Methodology
Storelevel
changes
MarketEvaluation
49
What Are The Coca-ColaBeverage Clusters?
Source: Nielsen Homescan Panel; AO Beverages includes RTD Coffee, Dairy Alternatives, Vegetable Drinks, Powdered Soft Drinks, Drinkable Yogurts, Baby Juice, Non-Carbonated Mixersand Meal Replacement beverages
RuralRural Late adopters of new beverage categoriesLate adopters of new beverage categories• Sparkling Soft Drinks 53% of Beverages—62% of Sparkling is Sparkling Soft Drinks 53% of Beverages—62% of Sparkling is RegularRegular
• High Citrus and 24 pack cansHigh Citrus and 24 pack cans
Mainstream Mainstream Middle-of-the road beverage preferencesMiddle-of-the road beverage preferences• Sparkling Soft Drinks 46% of Beverages—60% of Sparkling is Sparkling Soft Drinks 46% of Beverages—60% of Sparkling is RegularRegular
• Average brands and packagesAverage brands and packages
Urban Urban UpscaleUpscale
Early adopters of new beverage brands & Early adopters of new beverage brands & categoriescategories• Sparkling Soft Drinks 37% of Beverages, 14% is Juice/Juice Sparkling Soft Drinks 37% of Beverages, 14% is Juice/Juice DrinksDrinks
• High Ginger Ale and 2 literHigh Ginger Ale and 2 liter
Suburban Suburban UpscaleUpscale
Strong users of all beverage categoriesStrong users of all beverage categories• Sparkling Soft Drinks 42% of Beverages—46% of Sparkling is Sparkling Soft Drinks 42% of Beverages—46% of Sparkling is DietDiet
• High Diet Cola and TeaHigh Diet Cola and Tea
Urban Urban EthnicEthnic
Strong users of beverages with flavorStrong users of beverages with flavor• Sparkling Soft Drinks 42% of Beverages, 65% of Sparkling is RegularSparkling Soft Drinks 42% of Beverages, 65% of Sparkling is Regular
• High Lemon-Lime and OrangeHigh Lemon-Lime and OrangeShare of Non-Alcoholic Share of Non-Alcoholic
Beverage Retail $Beverage Retail $
Spklg46%
RTD Tea2%
Energy1%
JC/DR SS12%
Water8%
A/O Bev27%
Sports Drks4%
Reg:60%Reg:60%
Diet:40%Diet:40%
Spklg42%
RTD Tea2%
Energy1%
JC/DR SS13%
Water10%
A/O Bev27%
Sports Drks5%
Reg:54%Reg:54%Diet:46%Diet:46%
RTD Tea3%
Spklg37%
Energy2%
JC/DR SS14%
Water10%
A/O Bev29%
Sports Drks5%
Reg: 59%Reg: 59%Diet:41%Diet:41%
RTD Tea2%
Spklg42%
Energy1%
JC/DR SS14%
Water8%
A/O Bev30%
Sports Drks3%
Reg:65%Reg:65%
Diet:35%Diet:35%
Spklg53%
Energy1%
JC/DR SS11%
Water7%
A/O Bev22%
Sports Drks4%
RTD Tea2%
Reg:62%Reg:62%
Diet:38%Diet:38%
MarketEvaluation
50
Deliver “Store Level” Merchandising and Marketing Solutions
RightBrands
RightPackages
RightOccasion
sUrgent Items
HH Stock-up
Speedy Fill-in
JIT Meals HH Stock-up
Everyday Savings
RightBrands
RightPackages
RightOccasion
s
How Can Beverage Assortment Differ by Segment?
MarketEvaluation
51
Flavor EmphasisFlavor Emphasis
RuralRural
Diet Sparkling Diet Sparkling EmphasisEmphasis
Regular Sparkling Regular Sparkling EmphasisEmphasis
13%13%11%11%17%17%28%28%31%31%
Urban EthnicUrban EthnicUrban UpscaleUrban UpscaleSuburban Suburban UpscaleUpscaleMainstreamMainstream
% o
f %
of
Sto
res
Sto
res
Beverage Emphasis by Cluster In Coca-Cola Section
MarketEvaluation
52
Applying Shopper Segmented Merchandising At Store LevelProcess:Process:
1.1. MapMap beverage clusters to your beverage clusters to your shopper/store segmentsshopper/store segments
2.2. CalibrateCalibrate store list to ensure each store list to ensure eachstore is mapped to the right clusterstore is mapped to the right cluster
3.3. SurveySurvey each store to collect correct Coca-Cola section each store to collect correct Coca-Cola section fixture, cold equipment & rack information and confirm fixture, cold equipment & rack information and confirm store cluster classificationstore cluster classification
4.4. Start assortmentStart assortment work with review of macro work with review of macro merchandising guiding principles for relevant clustersmerchandising guiding principles for relevant clusters
5.5. Develop shelf planogramDevelop shelf planogram for each store utilizing store for each store utilizing store level sales data & merchandising guiding principleslevel sales data & merchandising guiding principles
6.6. Develop Marketing & MessagingDevelop Marketing & Messaging that connects with your that connects with your Shoppers to drive Profitable Growth, in Beverages and Shoppers to drive Profitable Growth, in Beverages and Cross CategoryCross Category
MarketEvaluation
53
Coca-Cola Experience Shows Shopper Segmented Merchandising Drives Results
• Proven success in Latin America: +8.5% in Coca-Cola Sales
– SKU rationalization by cluster
– New SKU launches to meet shopper needs
– Pricing decisions
– Planogram resets by shopper cluster
• Initial test results in the U.S. very positive
– Tienda (Hispanic) small store program in LA: +23% sales growth
– Denver market large format resets based on shopper clusters: +5.8% sales growth
– Shopper Segmentation of Enviga brand launch: Target key shopper segments and stores for the brand introduction
LaunchedNew
Package to Target
Consumer+10.6% !
Activated Convenie
nce Package
+13.1% !
MarketEvaluation
54
Insights to ActionMarket Evaluation
ActionsActionsInsightsInsights
Convert Shopper knowledge into Convert Shopper knowledge into information in action, information focused information in action, information focused on results (i.e., Store tailored planograms on results (i.e., Store tailored planograms to maximize sales and reduce out of to maximize sales and reduce out of stocks).stocks).
Each store has a unique DNA Each store has a unique DNA (Shoppers, Occasions & Needs).(Shoppers, Occasions & Needs).
Extensive shopper research & Extensive shopper research & insights drive store level insights drive store level assortment changes. assortment changes.
MarketEvaluation
Segment shoppers based on Segment shoppers based on their beverage purchases with their beverage purchases with five actionable store clusters.five actionable store clusters.
Segment shoppers in a way that Segment shoppers in a way that would lead to meaningful & would lead to meaningful & actionable changes at a store actionable changes at a store level.level.
Develop smaller shopper segments and Develop smaller shopper segments and tailor solutions to these segments. tailor solutions to these segments. Implement merchandising solutions that Implement merchandising solutions that reflect these differences. reflect these differences.
55
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
56
Supermarket visits are focused on today’s needs
Source: 2005 Coca-Cola RFID PathTracker StudyNote: Visuals do not represent only traffic pattern by visit segment. Visuals represent examples of types of visits.
20 Minute+ Trips (42% of all visits)
88% of these trips visit more than 1/4 of the store
58% of Trips Are
Less Than 20 Minutes
10-20 Minute Trips (21% of all visits)
28% of these trips visit more than 1/4 of the store
<10 Minute Trips (37% of all visits)
1% of these trips visit more than 1/4 of the Store
AdvancedMerchandising
57
Rear endcaps receive more shopper traffic than front endcaps
Products that are in the gondola will receive more shopper exposure if they are positioned towards the back
Traffic flow in most aisles (including CSD aisle)
tends to run back to front, with shoppers buying
mostly on their left.
Implication: Shoppers spend a significant amount of time in the back perimeter, shopping aisles from back to front.
Source: 2005 Supermarket RFID Study
Shoppers shop in a dominant, counter-clockwise pattern, shopping aisles from back
to front
AdvancedMerchandising
58
• Hot Spots: Mostly on the perimeter and a few center of store aisles leading to the checkouts: produce, meat, dairy and frozen food
• Dead Zones: Much of the center of store has light traffic
Shopper Density Map
Implication: The front and first quadrant of the store offer the greatest number of shopper exposures for messaging & displays
High Density
Low Density
The earliest part of the trip provides exposure to the most shoppers
Source: 2005 Supermarket RFID Study
AdvancedMerchandising
59
Early Progression
Shoppers
Total Store Shoppers
Quicker Decision Shoppers
CSD In-store merchandising efforts should align with shopper behavior and motivations
Early Progression Shoppers: Generate Excitement Message to the shopper’s needs. Cross-promote with center store
or higher margin perimeter categories.
Showcase new products and variety (brand & pkg.).
Total Store Shoppers: Cross-promote (e.g. tie-in center
store categories). Drive new product awareness. Showcase variety (brand & pkg.). Message to the shopper’s needs. Improve shopper navigation. Provide product information.
Quicker Decision Shoppers: Merchandise high frequency items to
make them easy to find and purchase. Cross-merchandise items frequently
purchased in combination. Communicate promotional information
(e.g. hot pricing) to capture unplanned purchases.
Inspire the impulse purchase. Emphasize convenience.
AdvancedMerchandising
60
Zone 1: Early Progression
Shoppers
Illustrative Opportunities: Generate excitement & awareness
- Key promotions
- “New news” Engage the shopper early
Characteristics of location:
Shopper Traffic: Very High
Decision-Making Time: None-Fast
Shopper Trip Types: Quick-Long
Stage in Trip Progression: Very Early
Targeting Early Progression Shoppers:Applying Insights to Early Displays
AdvancedMerchandising
61
Illustrative Opportunities: Message to the shopper’s needs Cross-promote with center store or higher
margin perimeter categories Showcase new products and variety
(brand & pkg.) Communicate information (e.g. product
benefits or details)
Characteristics of location:
Shopper Traffic: High
Decision-Making Time: Slow
Shopper Trip Types: Medium & Long
Stage in Trip Progression: Early
Permanent/Semi-Permanent Merchandising
Targeting Early Progression Shoppers:Applying Insights to Secondary Locations
Zone 1: Early Progression
Shoppers
AdvancedMerchandising
62
Zone 2: Quicker Trip Shoppers
Characteristics of location:
Shopper Traffic: High
Decision-Making Time: Fast
Shopper Trip Types: Quick-Medium
Stage in Trip Progression: Late
Illustrative Opportunities: Merchandise high frequency items to make
them easy to find and purchase Cross-merchandise items frequently
purchased in combination Communicate promotional information (e.g.
hot pricing) to capture unplanned purchases Emphasize convenience benefits of
packages
Connecting with Quicker Decision Shoppers:Applying Insights to Front Endcaps
AdvancedMerchandising
63
Zone 2: Quicker Trip Shoppers Temporary Cooler Shrouds
IC3 Call-to-Action Messaging
Characteristics of location:
Shopper Traffic: Very High
Decision-Making Time: Very Fast
Shopper Trip Types: Quick - Long
Stage in Trip Progression: Very Late
Illustrative Opportunities: Inspire the impulse purchase with call-
to-action messaging & bold imagery Stimulate trial of new products with trial-
sized packages Merchandise to her needs first
Connecting with Quicker Decision Shoppers: Applying Insights to the Checkout
AdvancedMerchandising
64
Zone 3: Total Store Shoppers
Characteristics of location:
Shopper Traffic: High - Medium
Decision-Making Time: Med. Slow
Shopper Trip Types: Medium - Long
Stage in Trip Progression: Early - Late Middle
Endcap
Illustrative Opportunities: Cross-promote (e.g. tie-in center
store categories) Drive new product awareness Showcase variety (brand & pkg.) Message to the shopper’s needs
Connecting with Total Store Shoppers:Applying Insights to Rear Endcaps
AdvancedMerchandising
65
Zone 3: Total Store Shoppers
Characteristics of location:
Shopper Traffic: Low-Medium
Decision-Making Time: Med. Slow–Medium
Shopper Trip Types: Medium-Long
Stage in Trip Progression: Late Middle-Late
Illustrative Opportunities: Improve shopper navigation Provide product information Inspire the shopper to purchase
(HCM-relevant imagery) Connect the shopper with front-
end categories (e.g. IC beverages)
Beverage Landscape Aisle Messaging
Connecting with Total Store Shoppers:Applying Insights to the Center Store
AdvancedMerchandising
66
Early Progression
Shoppers
Total Store Shoppers
Quicker Decision Shoppers
CSD In-store merchandising efforts should align with shopper behavior and motivations
Early Progression Shoppers: Generate Excitement Message to the shopper’s needs. Cross-promote with center store
or higher margin perimeter categories.
Showcase new products and variety (brand & pkg.).
Total Store Shoppers: Cross-promote (e.g. tie-in center
store categories). Drive new product awareness. Showcase variety (brand & pkg.). Message to the shopper’s needs. Improve shopper navigation. Provide product information.
Quicker Decision Shoppers: Merchandise high frequency items to
make them easy to find and purchase. Cross-merchandise items frequently
purchased in combination. Communicate promotional information
(e.g. hot pricing) to capture unplanned purchases.
Inspire the impulse purchase. Emphasize convenience.
AdvancedMerchandising
67
• The three most influential factors in a shopper’s purchase decision from a display are: Price, Brand and Variety.
• Two-thirds of shoppers say displays help them to stop and look at different products.
• Shoppers say CSD displays help remind them to shop for that category.• Carbonated soft drinks are the category shoppers claim to purchase most
often when they see it on display.• Shoppers say that they purchase almost half of the soft drinks they buy
from a display.
Shoppers frequently purchase categories when seen on display
Source: Shopper Display Intercept Study 2006: Integrated Research Associates
AdvancedMerchandising
68
Traditional “New Age” Sections are a Hodge-Podge of DSD Items
AdvancedMerchandising
69
Redefine Categories Based on Consumer Need States
CSDs and Refreshing Alternatives Juice/Drink Shelf Stable
Water Performance Beverages
Convenient Refreshment Health & Wellness
Hydration Functional
CREATE A “REFRESHMENT CENTER”CSD's and “New Age” SKU’s meet the Convenient Refreshment Need State and should be grouped together
• Redefine the Antiquated “New Age” Category as “Refreshing Alternatives” to Better Meet Consumers Needs for “Healthy” and “Versatile” Refreshment
• Shelve CSDs (“Enjoyable” Refreshment) on One Side of the Aisle and Refreshing Alternatives across from CSDs when possible
• Move Non Carbs from CSD set to Refreshing Alternatives
IMPROVE ORGANIZATION OF WATER CATEGORYGroup items together that meet the Hydration Benefit Need State
• Move Sports Water (e.g. Propel) from Water Aisle into Performance Beverages
• Reallocate space from declining Gallons to fast growing Single Serve
• Segment the Water aisle by Enhanced, Sparkling, Imports, Purified, Spring and Gallons
ENHANCE JUICE & JUICE DRINK CATEGORYGroup items together that meet the Health and WellnessNeed state
• Relocate All Drink Items That Contain 10% or More Juice Content to this Aisle Regardless of Route-to-Market
• Evolve the Consumer Usage Set to Include the Emerging PET Segment Between Aseptics (Youth) and Multi-Serve
CREATE A “PERFORMANCE BEVERAGE” CATEGORYFunctional Benefit Need State has grown in importance and redefining category will help consumers find the products they want and create excitement in the aisle.
• Co-locate All Functional or Performance Beverage Categories Together (Regular Sports Drinks, Sports Hydration, Energy Drinks)
• Shelve Where Sports Drinks Are Currently Located in Your Store
AdvancedMerchandising
70
Specific Steps to Reorganize Categories to Better Meet Consumers Needs
1.1. Create NEW “Performance Beverages” SetCreate NEW “Performance Beverages” Set1.Move Propel from Water Aisle and create Sports Hydration Segment which includes
PowerAde Option2.Move Energy Drinks from New Age to Performance Beverages
2.2. Move High Velocity Single-Serve Items Currently in New Age to Cold EquipmentMove High Velocity Single-Serve Items Currently in New Age to Cold Equipment3.3. Move RTD Coffee from New Age to Coffee AisleMove RTD Coffee from New Age to Coffee Aisle4.4. Reorganize New Age to Create NEW “Refreshing Alternatives” Section That Reorganize New Age to Create NEW “Refreshing Alternatives” Section That
Includes Fruit Drinks & Teas Previously in CSD SectionIncludes Fruit Drinks & Teas Previously in CSD Sectiona)<10% Fruit Drinks (Healthy Refreshment)b)RTD Teas (Versatile Refreshment)
5.5. Use Vacated CSD Space for Innovation and Highly Productive SKUsUse Vacated CSD Space for Innovation and Highly Productive SKUs
““Performance Beverages”Performance Beverages”in Shelf Stable J/D Aislein Shelf Stable J/D Aisle
““Refreshing Alternatives”Refreshing Alternatives”in Soft Drink Aislein Soft Drink Aisle
Coole
rC
oole
r
Coff
ee
Coff
ee
Secti
oS
ecti
onn
RefreshinRefreshingg
AlternativAlternativeses
AsepticAsepticss
S-S MPsS-S MPs& &
SingleSingleUnitsUnits
Multi-ServeMulti-Serve
PerformancePerformanceBeveragesBeverages
Healthy &Healthy &Versatile Versatile
NCBsNCBs(Fruit Drinks & RTD (Fruit Drinks & RTD
Tea)Tea)
CSDsCSDs
2 3
115544
AdvancedMerchandising
71
Performance Beverage Benefits
Performance Beverages - Functional Beverages
Segment Sports Drinks Sports Hydration Energy
Pro
du
ct
(s)
Consumed during physical activity during the day or during a light to moderate
workout
Consumed during social or other activities when energy is
desired
Used as a lower calorie alternative drink with added
vitamins and electrolytes during workouts
Consumer Benefits
Retailer Benefits
• Improve shop-ability of the aisle• Sports Drinks, Sports Hydration,
Energy:– Different ingredients– Align like products
• Improve ‘Center Store’ productivity• Differentiate versus competition• Convert shoppers into buyers• Drive excitement into stores• Create and define emerging
categories
AdvancedMerchandising
72
Products Can Then be Grouped Within this Segmentation
Refreshing Alternatives
Clear segmentation allows the shelf to be organized and easy to shop
For My Family (All Ages)12oz/12pk Cans, Multi-Pack Bottles, 1L-3L
For Me (Teens/Adults)Single- Serve and Multi-Serve Bottles
Pro
du
ct (
s)
Fruit Drinks Teas Fruit Drinks TeasSegment
AdvancedMerchandising
73
Segmentation and Productsin the Water Category
Water-Hydration
Clear segmentation allows the shelf to be organized and easy to shop
Single Serve Multi Serve
Segment Enhanced Sparkling Imported Purified Spring Gallons
Pro
du
ct
(s)
AdvancedMerchandising
74
Insights to ActionAdvanced Merchandising
ActionsActionsInsightsInsights
Shoppers spend a significant amount Shoppers spend a significant amount of time in the back perimeter, shopping of time in the back perimeter, shopping aisles from back to front.aisles from back to front.
Display new products, Cross-Display new products, Cross-Merchandising category tie-ins, Merchandising category tie-ins, and utilize Promotional messagingand utilize Promotional messaging.
Message to the shopper’s needs and Message to the shopper’s needs and Cross-promote with center store or Cross-promote with center store or higher margin perimeter categories.higher margin perimeter categories.
Engage the shopper early - Engage the shopper early - Merchandise high frequency items to Merchandise high frequency items to make them easy to find and purchase.make them easy to find and purchase.
The First Third of the Supermarket The First Third of the Supermarket Shopping Trip provides exposure to Shopping Trip provides exposure to the most shoppers - Higher Traffic the most shoppers - Higher Traffic and Slower Shop Times.and Slower Shop Times.
Shoppers shop in a dominant, Shoppers shop in a dominant, counter-clockwise pattern, counter-clockwise pattern, shopping aisles from back to front.shopping aisles from back to front.
AdvancedMerchandising
Traditional “New Age” Sections are a Hodge-Podge of DSD Items.
Redefine Categories Based on Consumer Need States and Segmentation.
75
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
76
Efficient Assortment(Too Many SKUs, Limited Space)(Too Many SKUs, Limited Space)
In-Store Space In Supermarkets Has Not Expanded As Quickly As SKUs
CPG Manufacturers Have Responded With A Record Number Of New SKU(s)
Expansion of Coca-Cola SKU(s)From 1986 to 2006
Impact Of Inventory-to-Sales and Assortment On System Value Chain
EfficientAssortment
77
• Which items drive sales, traffic and profits• Lost opportunities due to not carrying certain
items• Which items represent true variety, not
duplication• Which items are critical to consumer loyalty• Which items bring valuable (high spending,
frequent shopping) consumers to the category• Which items support your mission and category
strategy
Efficient Assortment
(Helps Determine..)(Helps Determine..)
EfficientAssortment
78
Efficient Assortment(Using Efficient Item Assortment Software)(Using Efficient Item Assortment Software)
• EIA Combines industry-standard methodologies for Efficient Assortment–As established by the
Joint Industry Committees on Efficient Consumer Response
• …And JDA’s industry-leading merchandising/software development expertise
Set Market Coverage Level
Confirm/Validate Additions/Deletions/
Retentions
Review and Finalize Assortment
Assortment Quantification
Fit Assortment to Shelf
Gather the Data
Calculate Assortment
Category Management Basics
EfficientAssortment
79
Insights to ActionEfficient Assortment
ActionsActionsInsightsInsights
Assess new products and Assess new products and positioning.positioning.
Brand and Package innovation - Brand and Package innovation - Increasing SKU proliferation.Increasing SKU proliferation.
Perform comprehensive Perform comprehensive analyses & interpretation of analyses & interpretation of category performance.category performance.
Evolving brands - missed sales and Evolving brands - missed sales and revenue opportunity to reach full revenue opportunity to reach full potential. potential.
Initiate and execute efficient Initiate and execute efficient assortment process.assortment process.
Consumer demand for variety may Consumer demand for variety may lead to “Variety Confusion”.lead to “Variety Confusion”.
EfficientAssortment
80
ShopperInsights
Market Evaluation
Pricing &PromotionAnalysis
Financial Analysis
Category Insights
SpaceManagement
EfficientAssortment
AdvancedMerchandising
81
Allocation of Inventory
Out-of-StocksLost Revenue
for Retailer and Bottler
Creates trial purchaseof competitors’
products
Out-of-Date Product
Excessive CashTied up in Inventory
Quality Assurance Issue
Even Sell DownsMaximizes Cash Flow
Maintains/grows consumer base
SpaceManagement
Inadequate Inventory
Excessive Inventory
Proper Inventory
Proper Inventory
82
Space Management(Principles: Art and Science)(Principles: Art and Science)
SpaceManagement
83C:/data/customer/ACFS/ACFS2 6/4/99 (83)
Space Management(Principles: Art and Science)(Principles: Art and Science)
Data Sources
Store Specific or Cluster POG Measures
SpaceManagement
84
Space Management(Getting “IT” Right at the Shelf)(Getting “IT” Right at the Shelf)
EIA
SpaceManagement
85
Insights to ActionSpace Management
ActionsActionsInsightsInsights
Sales / Category / Space Sales / Category / Space analysis.analysis.
Pressure on permanent space and Pressure on permanent space and effective inventory levels.effective inventory levels.
Continuous Assessment of Continuous Assessment of each SKU performance.each SKU performance.
Exciting new CSD category Exciting new CSD category innovation has “Squeezed” core innovation has “Squeezed” core CSD brand space. CSD brand space.
Tight Space has stunted core CSD Tight Space has stunted core CSD brand growth and expansion brand growth and expansion opportunities.opportunities.
Develop and implement a Develop and implement a course of action for product course of action for product introductions.introductions.
SpaceManagement
86
Summary - Coca-Cola is Focused on Understanding the Shopper
• We are engaging every aspect of our system to become a shopper-insights led, shopper marketing-driven organization.
• We are driven to help customers differentiate themselves by targeting shoppers based on their unique needs states and occasions.
• We are working with retailers to develop segmented business solutions that will better differentiate their stores and increase beverage category and total store sales.
• We are converting Shopper knowledge into information in We are converting Shopper knowledge into information in action, information focused on results.action, information focused on results.
Summary